MBA1328 Guest Teacher: Jaryd Krause-How To Buy Website Businesses Instead Of Building Them

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Hey everyone, I'm Jared Krause and thanks for joining me today. Today I'll be teaching you how to buy website businesses instead of building them. So let's get down to business. Now, first and foremost, why would you buy a website? Well, what most people don't actually realize is the stats that are 90% of all startups fail. And I was one of those people who bought into the whole hype of it being super simple to go away and start your own website business and make money, when the reality is it's actually not. So I decided to buy websites that had already passed that 90% failure rate, already had a proven track record that they're making money month over month. Now what a common question that I always get is, Jared, how much do websites cost? And more importantly, how much money do they even make? Well, you can go away and buy websites anywhere from the $5,000 range all the way up to $5 million or more. But first, let me answer what is a good price to start out at as a beginner and why start at that price? And then I will cover for you how much websites actually make. Now, I suggest to spend no less than the $10,000 price range and upwards to $100,000, which is a good $100,000, sorry, which is a good place to start. And now I have multiple website businesses myself and I've learned that if you spend anything under the $10,000 price range, you just buying yourself a startup where you need to spend a lot more time, money, effort and energy to build this thing up to hopefully pass that 90% failure rate and hopefully give you a return on your investment. So I suggest, and this is just a suggestion, because my clients are buying sites for a lifestyle, not to work their bum off in a startup. My suggestion is to spend no less than the $10,000 price range for the first sort of business as you buy. And anything above that means less risk, more money and more time, which is what we all want, right? As for how much these actually websites are make per year, you can make roughly on average 30% return on your investment per year. Now, sometimes this can be a little bit less, sometimes it can be a little bit more, and I've achieved a far better result and so have my clients. But this is just because we know what we're doing and we study this and we've gotten really good at it. Although, even if you were to just go away and buy a website and make a 20 to 30% return, your investment far better than the traditional forms of investing. And this is why so many people are wanting to learn how to buy website businesses. Now, where do you go away and buy these websites from? Now there's a couple of marketplaces. The first one is Flippa f l I double p a dot com and the second one is exchangemarketplace.com now this is a cool place to go away and see the returns that are being made and see, you know, you know, what type of website businesses are actually out there. However, on these marketplaces, there's so many websites for sale that are lemons, meaning you need to sift through a whole lot of these different types of website listings to ensure you can actually find the right one. And if you don't know how to do your research and due diligence, you really can get taken advantage of, which is why I suggest people to go to website brokers instead. Now, there's a fair few different website brokers. The first one I want suggest is Empire Flippers FE International Quiet Live Brokerage, Latonas. However, if you go on a Google and you just search website brokers, there's going to be a large range of website brokers that pop up and you can go away and look at those website brokers to find these website businesses for sale. And what you're going to learn is you're going to see how much these websites cost, how much they're making per month, what sort of work is required to run that business, and how many hours you need to, to spend to run that business per week or per month. Now, I suggest buying from website brokers because they have a reputation at stake, meaning they don't want to sell dud listings. And often what they do is they pre qualify these business and do some pre due diligence before they put them on the market and list them for other buyers to buy because they don't want to ruin their reputation and they don't want to get taken out of business because they are selling lemon websites. So that's why I suggest buying only from website brokers, especially when you're starting out. Now I covered a little bit about due diligence and how important it was, but how do you do your due diligence to ensure that you're buying a good website? And there's a few different things you need to do due diligence on? You got traffic, SEO, marketing, financials, a little bit about the competition and speaking to the seller. The first one I want to talk about is traffic. Now traffic is how many people are coming to the website and how they interact with the website. Now you want to check the charts for traffic and see if it's trending up, trending down, sideways, and most importantly, why. These why questions will pop up a lot during due diligence and you want to understand why the traffic is trending down. Most people don't realize that sometimes the traffic's trending down. However, that could be a seasonal business where they're selling summer gear or winter gear. They may have missed out on buying a really good business and walked away from because they didn't understand that the traffic was trending down only because it's a seasonal business and they could have bought a business that took them a couple of months a year to run. So that's really important to check the traffic. The next thing is SEO, which is search engine optimization. And you want to ensure the website has good SEO because it helps the website get ranked higher in the search engines like Google, Yahoo and Bing, which also helps them get more traffic to the site. And the more traffic you have coming to your website, the more money you can make. So you want to see if they've done some sort of SEO to the website and what that is and how effective that is. And you want to see if they haven't done any and why have they not focused on SEO rather than maybe, maybe they focus on doing some other type of marketing. Now that's the next form of due diligent to do, which is marketing. When it comes to marketing, you want to see what marketing they're doing, what marketing they're not doing, what marketing is working and what marketing is not working and why. If the marketing is not working, you want to understand why it's not working. So you can solve that as a potential new owner to this business. And if it is working, you want to ask why the marketing is working. So you can sure to double down on what is working and grow the business at a much more rapid pace. So asking these why questions throughout due diligence is really important. Financials. I'm going to say this is probably the most important step you need to do doing due diligence. Now, when you come to look at the financials, you're going to get a screenshot from the seller or the broker and they're also going to normally give you an Excel sheet with the profit and loss, which is like their profit and loss statement. What most people don't realize is that Excel sheet can just be filled up with any old number and the screenshots could just be butchered or edited to reveal that it's making really good money. So what I suggest people to do is do a screen share with the seller of them sharing your screen, sharing their screen with you when they're logged into their business's bank account and their business's merchant account and cross reference everything from that screen share over to the financials profit loss statement that you get, which is that Excel sheet to make sure everything adds up. Once you've done that, then you want to move on to looking at the competition and you want to see what is the competition doing that this website isn't and how can you copy a little bit of what that actual competition is doing to grow the website to add more value to your users as well and build this website business that you want to buy. Last but not least, you need to speak to the seller. Now this is probably the best tool for due diligence because you learn so much from the business when you're just speaking to the seller about the business. My favorite thing is that when you go away and buy a website, you're not looking at just one business to buy, you're looking at many website businesses. It's like when you're buying a property or an investment property, you don't just look at one and walk in and say, this is the best investment, I'm going to buy it. You look at many and when you do this, you learn so much about different website businesses and how they're growing their website businesses. Things that you can take note of and implement those things that you did learn into the business, you end up buying to grow it even more and get a higher return on your investment than you may have expected. So that's My favorite thing about buying websites is you get to look at so many of them. So let's recap this one. 90% of all startups fail. Why build one when you can buy one? Number two, I recommend spending no less than the $10,000 price range because anything under that is you're buying yourself a startup. Number three, average return on your investment is 30% return on your investment per year, which is more than traditional forms of investing. Number four Buy from website brokers until you get really really good. It's very important to buy from brokers because normally you have better listings for sale. Number five do your due diligence in the traffic. The SEO marketing financials competition and the seller call is absolutely key. Alright guys, this was absolutely awesome. I had a really good time. If you want to continue learning more about how to buy websites that are already successful and make money, check out my Podcast Buying Online businesses. We're ranked in the top five best passive income podcasts online by feedspot. And if you want some free tools, go away and check out my Due Diligence framework which takes all the guesswork out of due diligence and my Website Evaluator tool which helps you to value a website. To see whether it's good or not, head to buyingonlinebusinesses.com freeresources and you can get them there. Thanks guys.

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I absolutely love today's lesson by Jared because he's opening up a new world for entrepreneurs. Hey, this is a viable option for you to make passive income, to make money and to be an entrepreneur that's successful that has gone over that kind of threshold of does this business make money? Yes, it does. I bought it that way. And if you go to any of these brokers like Empire Flippers, you can flip through and see all the different business types that are on offer. There's businesses that sell for $27 million and there's businesses that sell for around that 10,000 mark that he mentioned. You should start at we're talking about SaaS businesses, we're talking about apps, we're talking about E commerce businesses, we're talking about Amazon dropshipping or fba. There's affiliate sites, so sites that just make money on affiliate commission. So depending on how much management you want, how much of a team you want to build, you could choose the right business model for you. Sites like the Empire Flippers also mention how much profit they make every month. Not only the revenue, but how much money they actually take home. Now obviously the goal here is to grow the business and make even more money. But I saw a business for sale on Empire Flipper for example, that's $27,000. It's not a crazy amount of money. It's not a little amount of money either, but it's not a crazy amount of money. But it makes around $1,200 a month in revenue. Let's say for example, you bought it for 27,000 and invest another 10,000 in growing and marketing that business. So you spent $37,000 on the business. So you can get that MRR from 1200 to maybe four or $5,000 a month. Spending $37,000 one time to make four to $5,000 a month in extra revenue, in passive revenue. That's pretty good. That's a good investment. And guess what, it's an asset. You may want to grow that revenue up to 10, 15, $20,000 a month. Few years down the line you could sell it and make a profit on your investment. Just like Jared mentioned, this is like the real estate market. You could buy these assets and then flip them later on. My only piece of advice is to look at the business model, see how many people it employs, what the market is and make sure it's aligned with what you want and what you want to do. If you're not interested in what actually the business does, then it's going to be hard for you to grow it and expand it. If you're a hands off person. If you want just something that's going to make money, you know, on affiliate commission, you just want to hire some content writers and things like that, then know what you want so that way you buy the right business for your lifestyle. Guys, don't forget Jared's amazing gift to us, his free resource at buying online businesses.com freeresources. Thanks Jared for the amazing lesson that wraps up today's lesson. Thank you so much for listening. Make sure you hit subscribe so you don't miss a beast so you get the next episode. Episode. As soon as it publishes, we're on every single app, whether it's Spotify or Apple Podcasts, Stitcher, Radio, Overcast, Himalaya, we're on them all. Before I go, I want to leave you with this. This takes time to buy a business, so take your time and like Jared mentioned, be open to several businesses, just like you'd be open to buying, you know, different houses. If you're buying a house for yourself, you're going to make a decision at the end, but you want to have something to compare it to and some food for thought, you know, so you can have different experiences and get some reps under you. In that kind of experience of buying a business, asking the right questions, seeing those screenshots, you know, having that screen share experience. He mentioned learning about the business model, learning about why they're leaving the business, the potential, their staff, their team, all that kind of stuff. The bigger the sale, the longer it's going to take because obviously the business will be a lot more intricate. But take your time and do it right. Thank you so much for listening and I'll check you in tomorrow's episode. I'll see you then. Take care.

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